Magazine article American Banker

Dodd Endorses Disaster Reforms, but Not Backstop

Magazine article American Banker

Dodd Endorses Disaster Reforms, but Not Backstop

Article excerpt

WASHINGTON -- Senate Banking Committee Chairman Chris Dodd Proposed A Series Of Property Insurance Reforms Wednesday To Give Homeowners Some Relief From Natural Disasters, But He Stopped Short Of Supporting A National Catastrophe Insurance Fund That Would Augment Private Insurers.

"I'm uneasy about having a large, national program. That gets into serious issues in terms of how you do that," Sen. Dodd said after a hearing on disaster relief insurance. "I'm resistant to that notion. I still think the private market can do a job here that needs to be done."

The Connecticut Democrat said he wants to package new reforms - including more funding for damage mitigation programs, tax deductions for homeowners who pay proportionately higher premiums, and the formation of a high-level commission to explore future insurance options - with reforms to the National Flood Insurance Program.

He signaled that a flood insurance bill could move relatively quickly, largely because his committee already approved a bill last year by Sen. Richard Shelby of Alabama, the panel's top Republican, aimed at fixing the program badly bruised after the 2005 Gulf Coast hurricanes.

But the proposals outlined Wednesday leave out the key reform pushed by Florida officials and lenders to control the high premiums that mount before and after each hurricane season.

"Banks need to care because obviously the recovery in any one of these areas and thousands of others depend on insurance proceeds," said Alex Sanchez, the president of the Florida Bankers Association, in an interview.

But similar to the insurance industry - which is split over whether a fund will help or hurt - bankers generally have yet to reach a consensus on catastrophe insurance, observers said.

"Right now, the consensus has yet to really gel, because there are a lot of moving parts to creating this fund," said Kevin McKechnie, the American Bankers Association's senior legislative counsel. …

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